Home Insurance Scheme of Modi Government will increase insurance Penetration in India
Insurance Foundation of India (IFI) has been propagating home insurance for masses. Mr. S K Sethi Chief Executive Officer, IFI has welcomed the thinking of Government of India for planning to launch a home insurance scheme for all throughout the country. The scheme will cover damages caused to lower income group from floods, earthquakes and fire. Sum assured per house will be Rs 3, 00,000. Even though various General Insurance Companies have come up with premium of Rs 1000 for the scheme, whereas govt is looking at pegging the premium to Rs 500.
It is a welcome and commendable initiative from the govt and much needed in our country.Home insurance penetration is in India is less than 1% and there is huge potential to take it to higher levels.Countries like US, UK, France, Australia and China have home insurance penetration in the range of 90-97%. According to Sethi “the reason has been that as and when calamity had occurred in the past then payment has been made out of central Government or State Government Funds. By going in for Insurance we are putting these types of losses on formal risk management route and faster relief to those whose houses are damaged “
It is ironical that as a society we lay a great emphasis on buying a house. It is a major life goal and an aspirational asset for majority of Indians across all social strata. Owning a roof above one’s head has emotional value as well as social pride attached to it. Paradoxically, when it comes to insuring our coveted physical asset where we spend much of our life as well as our hard earned money, there is nether much awareness nor uptake in home insurance.
It is a staggering fact that a large landmass of India is prone to natural calamities like earthquakes and floods, as we have witnessed in past few years. India, in particular is highly vulnerable to substantial losses in the event of an earthquake or other natural disaster due to dense population, poor urban planning and non-adherence of safety regulations.
At the same time, a population of 1.3 billion people requires massive housing in urban as well as rural/hilly areas. With a booming economy, there is a huge demand for housing resulting in rampant construction activity over agricultural land, forest area and in mountainous regions. Rules and safety norms are openly being flouted; there is dismal architectural planning without safeguards and risk prone illegal construction.
We need to be mindful of the fact that we reside in a seismically active zone.
Approximately 59 percent of India's land mass is prone to earthquakes of varying intensities. About 11 percent area falls in zone V, 18 percent in zone IV, and 30 percent in zone III. The entire Himalayan belt is considered risk prone to devastating earthquakes of magnitude 8 and more e.g. there have been a series of mild earthquakes recently in Delhi-NCR and other parts of the country. According to experts, Delhi-NCR is in the second-highest seismic hazard zone (Zone IV) and a stronger earthquake is possible.
In last few years, Climate change, erratic weather patterns and massive urbanisation has resulted inregular flooding in all cities small or large, during monsoons. There is massive damage to property and belonging as we witnessed in Chennai floods and Mumbai torrents year after year. Landslides, cloudbursts and flash floods in hills sweep away entire villages and homes every year.
The Asian Development Bank has estimated that floods are the most devastating among climate-related disasters in India. They account for more than 50 per cent of all climate-related disasters in the country.
An analysis by the DTE-CSE showed that in the last 65 years (1952-2018), there has not been a single year when flood didn’t impact the country with significant losses to lives and property.Floods killed 109,412 people in the span. Over 258 million hectares of crops were damaged and 81,187,187 houses were raged. The total economic losses due to crop, house and other property damages came to Rs 4.69 trillion. (Source: Downtoearth.org.in)
Similarly, massive fire incidents in residential areas and high rises have not abated over the years. Despite serious fire accidents in the past vastly covered in media, there is hardly any action on adherence to fire safety guidelines in building and infrastructure projects. Majority of high rises do not follow fire safety maintenance and protocols. Some of the areas are not even accessible for fire fighters in a fire accident.
Our homes are also increasingly prone to fire incidents due to many inflammable items like upholstery, gadgets, LPG connections, heating, faulty and poor quality electrical fittings and cloistered spaces.
To safeguard oneself from the financial and emotional pain in case of loss to your property due to a natural calamity, fire or other manmade disasters or theft, it is important for every homeowner to buy property insurance.
We are sure that this step of Indian Government will get wide appreciation.
Press Release released on July 2021 by:
Insurance Foundation of India
Om Plaza, 430/7, 1st Floor, Sant Nagar,
East of Kailash, New Delhi -110065
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Email: email@example.com Web:www.ifingo.org
Om Plaza, 430/7, 1st Floor, Sant Nagar
East of Kailash
Insurance Foundation of India (IFI) is a Not for Profit Organization, set up under the Trust Registration Act 1882 of Government of India, to promote the awareness and growth of Insurance in India through various channels.
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